PROBLEM 1

Nova Rise
Acquisition Cost 3,375,000.00 1,680,000.00
FMV of Net Assets 2,390,000.00 2,065,000.00
Goodwill/(Gain) 985,000.00 (385,000.00)

Shareholders' Equity:
Acquirer @ BV
Common Stock 2,748,500.00
APIC 176,500.00
Retained Earnings 1,250,000.00
Issuance - Nova 3,375,000.00
Issuance - Rise 1,680,000.00
Gain on Bargain Purchase 385,000.00
Total SHE 9,615,000.00 (D)

Assets:
Acquirer @ BV 4,500,000.00
Nova @ FMV 2,600,000.00
Rise @ FMV 2,205,000.00
Goodwill on Acquisition 985,000.00
Total Assets 10,290,000.00 (A)

PROBLEM 2

Acquisition Cost
Issuance of stock 816,000.00
Contingent Consideration 195,000.00
Total 1,011,000.00
FMV of Net Assets 696,450.00
Goodwill/(Gain) 314,550.00 (C)

Total expense:
Acquisition expenses 257,200.00
Loss on Contingent Consideration 260,000.00
Total 517,200.00 (B)

Acquisition expenses
Legal fees 35,600.00
 Broker's fee 23,600.00
Accountant's fee 80,000.00
Other direct cost 75,000.00
General and allocated expe 43,000.00
Total 257,200.00

Loss on Contingent Consideration

Actual payment 455,000.00
Initial setup amount 195,000.00
Loss on CL 260,000.00

PROBLEM 3

Retained Earnings
Acquirer @ BV 750,000.00
Acquisition expenses 218,600.00
Total 531,400.00 (New Rule) 1 SIC is deducted from APIC of n
2 If APIC from new issuance is n
3 If APIC from old issuances is a
Retained Earnings
Acquirer @ BV 750,000.00
Acquisition expenses 218,600.00
Stock Issuance cost (in excess of APIC 5,400.00
Total 526,000.00 (Old Rule) (C) 1/SIC is deducted from APIC o
2/If APIC from new issuance i

Acquisition cost
Stock issuance 1,350,000.00
Contingent consideration 750,000.00
Total 2,100,000.00
FMV of Net Assets 1,895,000.00
Goodwill/(Gain) 205,000.00

Total Assets: Total Liability (sample computation)

Acquirer @ BV 5,000,000.00 Acquirer @ BV
Acquiree @ FMV 2,860,000.00 Acquiree @ FMV
Goodwill from acquisition 205,000.00 Contingent Liability
Cash/Noncash consideration - Debt security issued
SIC paid 355,400.00 SIC (unpaid)
Expenses paid 218,600.00 Expenses (unpaid)
Total Assets 7,491,000.00 (D) Total Liability

PROBLEM 4

Case 1
Consideration transferred 500,000.00
Recognized amount of NCI 89,500.00 (500000-142000)/80% x 20%
Total consideration 589,500.00
FMV of Net Assets 572,500.00
Goodwill/(Gain) 17,000.00 x

Parent - 80% NCI - 20%

Acquisition cost 500,000.00 89,500.00
FMV of Net Assets 458,000.00 114,500.00
Goodwill/(Gain) 42,000.00 (25,000.00) x NCI or subsidiary doesn't recognize Ga
Rule: NCI is to be recognized at (1) estim

Consideration transferred 500,000.00

Recognized amount of NCI 114,500.00 (Higher between proportionate share and Estimated FV)
Total consideration 614,500.00
FMV of Net Assets 572,500.00
Goodwill/(Gain) 42,000.00 (C)

Case 2
Consideration transferred 523,000.00
Recognized amount of NCI 122,750.00 Fair value, given
Total consideration 645,750.00
FMV of Net Assets 572,500.00
Goodwill/(Gain) 73,250.00 (B)

Parent - 80% NCI - 20%

Acquisition cost 523,000.00 122,750.00
FMV of Net Assets 458,000.00 114,500.00
Goodwill/(Gain) 65,000.00 8,250.00

Case 3
Consideration transferred 500,000.00
Recognized amount of NCI 115,750.00 (500000-37000)/80% x 20%
Total consideration 615,750.00
FMV of Net Assets 572,500.00
Goodwill/(Gain) 43,250.00 (A)

Parent - 80% NCI - 20%

Acquisition cost 500,000.00 115,750.00
FMV of Net Assets 458,000.00 114,500.00
Goodwill/(Gain) 42,000.00 1,250.00

PROBLEM 5

Consideration transferred 2,580,000.00

Recognized amount of NCI 450,000.00 (2580000-30000) /85% x 15%
Total consideration 3,030,000.00
FMV of Net Assets 2,157,000.00
Goodwill/(Gain) 873,000.00 consolidated presentation

Parent - 85% NCI - 15%

Acquisition cost 2,580,000.00 450,000.00
FMV of Net Assets 1,833,450.00 323,550.00
Goodwill/(Gain) 746,550.00 126,450.00

Total Assets:
Acquirer @ BV 8,750,000.00
Acquiree @ FMV 3,175,000.00
Goodwill from acquisition 873,000.00
Cash/Noncash consideration 2,580,000.00
SIC paid -
Expenses paid 125,000.00
Total Assets 10,093,000.00 (B)

Shareholders' Equity:
Acquirer @ BV
Common Stock 3,400,000.00
APIC 1,575,000.00
Retained Earnings 1,700,000.00
Issuance in Acq -
Gain on Bargain Purchase -
NCI 450,000.00
Expenses 125,000.00
Total SHE 7,000,000.00 (A)

PROBLEM 6

Case 1
Consideration transferred 105,000.00
Recognized amount of NCI 61,000.00 vs (183000 x 30% = 54900)
Total consideration 166,000.00
FMV of Net Assets 183,000.00
Goodwill/(Gain) (17,000.00) (A)

Parent - 70% NCI - 30%

Acquisition cost 105,000.00 61,000.00
FMV of Net Assets 128,100.00 54,900.00
Goodwill/(Gain) (23,100.00) 6,100.00

Working Paper Entries:

CS - S 15,000.00 **S - Subsidiary
APIC - S 30,000.00 P - Parent
RE - S 90,000.00
Inv in S 94,500.00
NCI - NAS 40,500.00

Eqpt 48,000.00
Inv in S 33,600.00
NCI - NAS 14,400.00

Inv in S 23,100.00
Gain on Acq 17,000.00
NCI - NAS 6,100.00

Case 2
Consideration transferred 136,800.00
Recognized amount of NCI 36,600.00 (136800 / 80% x 20%) = 34200 vs (183000 x 20% = 36600)
Total consideration 173,400.00
FMV of Net Assets 183,000.00
Goodwill/(Gain) (9,600.00)
 Parent - 80% NCI - 20%
Acquisition cost 136,800.00 36,600.00
FMV of Net Assets 146,400.00 36,600.00
Goodwill/(Gain) (9,600.00) -

Working Paper Entries:

CS - S 15,000.00 **S - Subsidiary
APIC - S 30,000.00 P - Parent
RE - S 90,000.00
Inv in S 108,000.00
NCI - NAS 27,000.00

Eqpt 48,000.00
Inv in S 38,400.00
NCI - NAS 9,600.00

Inv in S 9,600.00
Gain on Acq 9,600.00

Consolidated Shareholders' Equity:

P - SHE
Common Stock 150,000.00
APIC 450,000.00
Retained Earnings 810,000.00
Issuance in Acq -
Gain on Bargain Purchase 9,600.00
NCI 36,600.00
Expenses -
Total SHE 1,456,200.00 (D)

Case 3
Consideration transferred 243,000.00
Recognized amount of NCI 27,000.00 (243000 / 90% x 10% = 27000) vs est. FMV (183000 x 10% =
Total consideration 270,000.00
FMV of Net Assets 183,000.00
Goodwill/(Gain) 87,000.00
 Parent - 90% NCI - 10%
Acquisition cost 243,000.00 27,000.00
FMV of Net Assets 164,700.00 18,300.00
Goodwill/(Gain) 78,300.00 8,700.00

Working Paper Entries:

CS - S 15,000.00 **S - Subsidiary
APIC - S 30,000.00 P - Parent
RE - S 90,000.00
Inv in S 121,500.00
NCI - NAS 13,500.00

Eqpt 48,000.00
Inv in S 43,200.00
NCI - NAS 4,800.00

Goodwill 87,000.00
Inv in S 78,300.00
NCI - NAS 8,700.00

RULES:
Goodwill and Gain on Bargain Purchase ---> Zero in the books of the Parent
Investment in Subsidiary ---> Zero in the consolidated FS
NCI ----> Zero in the books of the Parent

Total Assets:
Acquirer @ BV 1,500,000.00
Acquiree @ FMV 198,000.00
Goodwill from acquisition 87,000.00
Cash/Noncash consideration 243,000.00
SIC paid -
Expenses paid -
Total Assets 1,542,000.00 (A)

PROBLEM 7

Consideration transferred 765,000.00 (540000 / 60% x 85%)

Recognized amount of NCI 125,000.00 fair value, given
Total consideration 890,000.00
FMV of Net Assets 640,000.00 (920000 - 280000)
Goodwill/(Gain) 250,000.00 (B)

Parent - 85% NCI - 15%

Acquisition cost 765,000.00 125,000.00
FMV of Net Assets 544,000.00 96,000.00
Goodwill/(Gain) 221,000.00 29,000.00

PROBLEM 8

Consideration transferred 218,750.00

Contingent consideration 3,750.00
Total consideration 222,500.00
FMV of Net Assets 165,000.00
Goodwill/(Gain) 57,500.00

Total Assets:
Acquirer @ BV 225,000.00
Acquiree @ FMV 176,000.00
Goodwill from acquisition 56,500.00 (57500 + 1250 - 2250)
Cash/Noncash consideration -
SIC paid 8,500.00
Expenses paid 4,750.00
Total Assets 444,250.00 (D)

Entries on Goodwill: ***Adjustment on Contingent c

Goodwill 1,250.00 from the date of acquisition i
Contingent Consideration 1,250.00 adjustement is made to P/L.
March 1 - contingent consideration was ascertained to be 5000
(5000 - 3750 = 1250)

Non-cash assets 2,250.00

Goodwill 2,250.00
June 1 - provisional appraisal on NCA was ascertained to have increased by 2250
:P Masakit sa balikat mag-type nito grabe lang. XD
 SIC is deducted from APIC of new issuance
If APIC from new issuance is not enough, excess will be deducted from APIC of old issuances
If APIC from old issuances is also not enough, excess will be charged to R/E.

1/SIC is deducted from APIC of new issuance

2/If APIC from new issuance is not enough, excess will be charged to R/E.

bility (sample computation)

1,250,000.00
965,000.00
750,000.00
rity issued -
-
-
 2,965,000.00

Rules:
Goodwill - may be shared by parent and subsidiary
Gain - for parent only
Control premium - attributable to parent only / part of purchase price
NCI is recognized at 1/Fair value if given
2/ Estimated fair value (based on FMV of Net assets)
3/Proportionate share (based on purchase price, net of control premium)

subsidiary doesn't recognize Gain from Bargain Purchase

I is to be recognized at (1) estimated FV or (2) proportionate share, whichever is higher.

nate share and Estimated FV)

vs estimated FMV (2157000 x 15% = 323550)
00 vs (183000 x 20% = 36600)
0) vs est. FMV (183000 x 10% = 18300)
***Adjustment on Contingent consideration and Provisional values when ascertained within one year
from the date of acquisition is made to Goodwill account. If beyond one year,
adjustement is made to P/L.
et of control premium)